Abstract

We report experimental findings on how individuals from different cultures solve a repeated coordination game of common interest. The results overturn earlier findings that fixed pairs are almost assured to coordinate on an efficient and cooperative equilibrium. Subjects in the prior experiments were US university students, whereas the subjects in our study are men drawn from high and low castes in rural India. Most low-caste pairs quickly established an efficient and cooperative convention, but most high-caste pairs did not. The largest difference in behavior occurred when a player suffered a loss because he had tried to cooperate but his partner did not: In this situation, high-caste men were far less likely than low-caste men to continue trying to cooperate in the next period. Our interpretation is that for many high-caste men, the loss resulting from coordination failure triggered retaliation. Our results are robust to controls for education and wealth, and they hold by subcaste as well as by caste status. A survey we conducted supports the ethnographic evidence that more high-caste than low-caste men prefer to retaliate against a slight. We find no evidence that caste differences in trust or self-efficacy explain the caste gap in cooperation in our experiment. Our findings are of general interest because many societies throughout the world have cultures that lead individuals to (mis)perceive some actions as insults and to respond aggressively and dysfunctionally.